President Obama pledged today to halve the $1.3 trillion deficit by the end of his first term and spoke to Governors at a summit, urging them to use the federal stimulus money responsibly in their states. Kwame Holman reports.

TRANSCRIPT

GWEN IFILL: President Obama once again spent the bulk of the day focusing on economic issues, speaking to the nation’s governors about spending, and then presiding over an unusual bipartisan White House summit on fiscal responsibility. NewsHour correspondent Kwame Holman has more.

KWAME HOLMAN: Today’s fiscal responsibility summit was the first step in a weeklong effort by the president to put the focus on the nation’s budget deficit.

BARACK OBAMA, President of the United States: We cannot and will not sustain deficits like these without end. Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and defer the consequences to the next budget, the next administration, or the next generation.

KWAME HOLMAN: Mr. Obama told participants, which included lawmakers from both parties, as well as leaders of community organizations, he will cut the $1.3 trillion deficit in half by 2013.

Savings were expected to come in part from a winding down of the war in Iraq and allowing the Bush tax cuts for the wealthiest Americans to expire in 2011.

The president said his budget will account for costs associated with the wars in Iraq and Afghanistan, natural disasters, and the yearly fix of the alternative minimum tax, items routinely left out of past budgets by the Bush administration.

BARACK OBAMA: For too long our budget process in Washington has been an exercise in deception, a series of accounting tricks to hide the extent of our spending and the shortfalls in our revenue, and hope that the American people won’t notice.

Budgeting certain expenditures for just one year when we know we’ll incur them every year for five or ten, budgeting zero dollars for the Iraq war — zero — for future years, even when we knew the war would continue, budgeting no money for natural disasters, as if we would ever go 12 months without a single flood, fire, hurricane or earthquake.

We do ourselves no favors by hiding the truth about what we spend. In order to address our fiscal crisis, we’re going to have to be candid about its scope.

And that’s why the budget I will introduce later this week will look ahead 10 years and will include a full and honest accounting of the money we plan to spend and the deficits we will likely incur.

Stimulus funds for Medicaid

KWAME HOLMAN: Mr. Obama added getting the country's economic house in order also would mean addressing health care costs, a task he called the "single, most pressing challenge."

While his afternoon was spent figuring out ways to save money, Mr. Obama's morning dealt with how to spend money wisely. The president announced in a meeting with the nation's governors that Vice President Joe Biden would oversee the administration's implementation of the $787 billion stimulus plan.

He also tapped Interior Department Inspector General Earl Devaney to lead the board charged with watching over how the funds are spent.

President Obama informed the governors that the first installment of $15 billion from the stimulus would be made available Wednesday to help states cover the cost of Medicaid programs.

BARACK OBAMA: Now, that means that, by the time most of you get home, money will be waiting to help 20 million vulnerable Americans in your states keep their health care coverage.

Children with asthma will be able to breathe easier; seniors won't need to fear losing their doctors; and pregnant women with limited means won't have to worry about the health of their babies.

Some Republicans turn down funds

KWAME HOLMAN: A handful of Republican governors have said they will turn down some of the funds, such as money to expand unemployment benefits, because it would require raising taxes on employers once the stimulus money runs out.

Mr. Obama acknowledged such concerns were legitimate, but warned against fixating on one provision that accounts for less than 1 percent of the plan's overall cost.

BARACK OBAMA: So if we agree on 90 percent of the stuff, and we're spending all our time on television arguing about 1 percent, 2 percent, 3 percent of the spending in this thing, and somehow it's being characterized in broad brush as wasteful spending, that starts sounding more like politics. And that's what right now we don't have time to do.

KWAME HOLMAN: Louisiana Republican Gov. Bobby Jindal said last week he intended to pass on some of the unemployment funds. After today's meeting at the White House, he was asked if the president's comments were fair.

GOV. BOBBY JINDAL (R), Louisiana: No. One, let me say this. I do appreciate the president acknowledging that there are legitimate concerns, legitimate issues when it comes to taking temporary federal dollars that could create permanent state spending obligations, for example, the money that we identified in Louisiana on Friday that we will not be accepting.

However, I continue to say, as I've said before, that certainly I think there could have been a very different stimulus bill written. There could have been a stimulus bill that was truly targeted and temporary, focused on infrastructure, focused on the kinds of tax credits that would have gotten investment moving in the private sector.

Bipartisanship discussion continues

KWAME HOLMAN: At the conclusion of his fiscal responsibility summit late this afternoon, the president asked for reactions from participants. He first called on his former rival for the presidency, John McCain.

SEN. JOHN MCCAIN (R), Arizona: I know that you already made plans to try to curb some of the excesses in procurement. We really have to do that. We're going to have to pay for Afghanistan, as you well know, and we're not done in Iraq.

But most importantly, we have to make some tough decisions. You, Mr. President, are going to have to make some tough decisions about not only what we procure, but how we procure it. And I thank you for the opportunity of sharing thoughts with a lot of very smart people.

BARACK OBAMA: John, this is going to be one of our highest priorities.

SEN. MAX BAUCUS (D), Montana: I think it's very symbolic and very interesting that the first person you called upon was John McCain. And that's the approach I think we need to take here generally and specifically with health care reform.

KWAME HOLMAN: Participants warned tough fiscal choices will test the philosophies of both political parties. Democrat Charles Rangel, chairman of the tax-writing House Ways and Means Committee, said some Republicans are likely to take issue with closing tax loopholes.

REP. CHARLIE RANGEL (D), New York: If you're looking for a fight, a partisan fight, every loophole you close is a tax increase, and we have to get over that to make certain that the vast majority of businesses recognize it's in their best interests to do the right thing (inaudible)

BARACK OBAMA: Well, you were here -- you were here in '86. It's been done before. We might be able to get it done this time.

KWAME HOLMAN: For his part, Texas Republican Joe Barton reminded the president of the need to take seriously the concerns of the GOP.

REP. JOE BARTON (R), Texas: I think the House Republicans have shown that, when we're not included in the decision-making, we're disinclined to sign off on the solution. And it's very easy in the House, as it's set up to get things done quickly if the majority is united, to forget about the minority. But if you really want consensus, I would encourage you to encourage the speaker to have a true open process.

BARACK OBAMA: On the one hand, the majority has to be inclusive. On the other hand, the minority has to be constructive. And so to the extent that on many of these issues we are able to break out of sort of the rigid, day-to-day politics and think long term, then what you should see, I think, is the majority saying, "What are your ideas?" The minority has got to then come up with those ideas and not just want to blow the thing up.

KWAME HOLMAN: President Obama will continue making his case to lawmakers tomorrow night, when he addresses a joint session of Congress.

PBS NewsHour allows open commenting for all registered users, and encourages discussion amongst you, our audience. However, if a commenter violates our terms of use or abuses the commenting forum, their comment may go into moderation or be removed entirely. We reserve the right to remove posts that do not follow these basic guidelines: comments must be relevant to the topic of the post; may not include profanity, personal attacks or hate speech; may not promote a business or raise money; may not be spam. Anything you post should be your own work. The PBS NewsHour reserves the right to read on the air and/or publish on its website or in any medium now known or unknown the comments or emails that we receive. By submitting comments, you agree to the PBS Terms of Use and Privacy Policy, which include more details.